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tv   Capital News Today  CSPAN  April 19, 2013 11:00pm-2:01am EDT

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it would make things even worse. i absolutely agree with you that the solution is being applied by a lot of foreign countries which is very different and probably not appropriate for us but if you look at the rest of the world, they have their own diverse solutions themselves and there is a common pattern towards balancing of trade and running trade surpluses particularly against the biggest on the block uncle sam but the ways in which they do this are very different. if you just apply a flat tax on u.s. imports that's one way to push our trade back into balance that doesn't involve risks of
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crony capitalism, that doesn't involve risks to the government micromanaging the economy. if you say okay which is going to have a flat tariff of 10% or 20% or 30% whatever it takes to get to a zero trade deficit that doesn't introduce a lot of corruption or a lot of dangers bad policymaking because it's a very simple policy. it's just determined by an arithmetical formula and there's no opportunity for anybody to play games. one of the good things about it if you have a flat tariff, is if you had a 30% tariff on imported goods that's not enough to relocate the production of t-shirts that united states because cost is too great. it's great to relocate things like silicon wafer fabrication so would tend to relocate back to the u.s. high value capital-intensive skill intensive industries which is of course what we want to do. those are the industries that are high-quality -- high-quality
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into she wants to have and those are the industries that don't want to lose. i point that out just to point out that if you do get serious about protectionism, protectionism has a logic to it which if you understand what that logic is, i think it would be possible for the u.s. to make a winner out of this. whether we should actually go in that direction is another question but the possibility i think is definitely there. i think you can't dismiss this as infeasible. >> i have two questions. my first question is my recollection is both -- bob have written books critiquing free trade and i was wondering how yours differs from theirs and my other question is i remember years ago attending conference on free trade and one of the things they talked about was the other side. for example a lot of people in his country are concerned about immigration from mexico that most real -- americans don't
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realize is cultural imports or exports from our country, back to our country are forcing them because they're not able to make a living as farmers and i wondered how you felt about issues like that? >> obviously when i talk to an american on the ends i deal mainly with the issues it presents for us but free trade is not a good policy for any country. the specific probably were talking about there after nafta there was a surge in american corn exports to mexico and reproduce corn on these giant mechanized farms and reproduce it a lot cheaper than mexican peasant farmers using hand tools etc. etc. so you lower the price of corn. it's cheaper food which is presumably a good thing that makes it impossible for people who stand business to do this. they can't go and make silicon shirts overnight which is kind
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of part of the myth of free trade economics and free market economics is that if you destroy jobs and replace them they will just disappear. when you have people with little education with very fixed circumstances, if you take their livelihood away they don't have a lot of options. sure there are a lot of rob rooms with free trade and what it can do for third world countries. one issue, a big issue is when you have weak property rights if you have somebody who is a farmer and one of the defining characteristics of third world countries is of course the majority of the population are closed within their assistance farmers. they don't work in actors and they grow their own food to live. where you have people like this in a relatively isolated economy they may be left alone by the
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powerful economic interests in the country because nobody really cares what they do. when you open these countries up to the rest of the world and you massively open them up for exports and imports, to put it bluntly the fat-cats in this country start stealing people's land to grow export crops and these people starve or they have to work as landless agricultural laborers. that ties into a whole lot of issues that are not in my field of expertise but yes i do talk in my book about how the exposure particularly the southern exposure of primitive economies to the full force of the global economy can be very distraught with and of course corruption out right in legality and political problems in the country's only makes it worse. but yes free trade can definitely be a part of it. there is no question. see ian i really enjoyed your presentation. thank you very much. you opened my eyes about a lot
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of things. i lived in washington for a number of years and belong to a club and we said guys like them on a regular basis making their presentations. i used to have lunch on fridays at least once a month with a fellow by the name of phil mero. i'm sure you knew phil. when i got into town this business of trade deficits just made me crazy. i thought this was coming, how can this continue on in on? phil was president of the eximbank at that time a u.s. export bank so i would would say to phil, phil tell me why trade deficits are good. his explanation was very interesting and i'd be interested in your assessment of it. he goes back to the 1980s where congress became less than anxious to do any kind of country aid, any kind of foreign aid. the bureaucrats, the feds
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developed these mechanisms having funds available for the president to use. a lot of it is this trade deficit which in his kenyan was in fact foreign aid, very deliberately done managed and run by the bureaucracy. give us your opinion on that. see that's pretty obviously true and most recently increased pakistan's textile quota to get them to cooperate with us on afghanistan. that sending a little bit because we have opened the market so much now that there is not much left to give away if it's conceded already but as i said that's the cold war playbook. america's diplomats have a very long time been remarkably ignorant of an indifferent to economic concerns. it's really remarkable. i read sometimes left-wing authors who think america's foreign policies this steaming
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economic thing to grab every spare penny anywhere to be found in the world. that's implemented by certain aspects of our policy at the state department and the diplomats generally are quite insistent on this vote they assume america has the strongest economy in the world and always will have the u.s. does need to maintain serious commercial services the way foreign countries do that promote or exports abroad. they sort of do but there is no comparison to other nations which view protecting their export interest as a key goal of their diplomats abroad so yeah you're basically right on that. >> hi. it's nice to see you. my question is concerning foreign american investments. so in her book -- claimed that between 1988 to 2008 the u.s.
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government took nearly 2000 proposal applications for business in the united states so as you know the government can give more tax revenue so do you support full investment and what do you think about it? thank you very much. appreciate it. >> okay. the standing institution of the u.s. government for vetting issues of foreign investment is called cfius, the committee of foreign investment of the united states and its record is public. you can download it off the internet. the fact is the u.s. rejects very few applications for foreign direct investment. most foreign direct investment is not large enough to fall under their purview.
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they reject deals with very sensitive military technologies and stuff like that. for the most part, our investment market is just about the most open and the world. i don't think quantitatively if you look at the numbers, i don't think you can quantitatively make any nonlaughable case that the united states is close to foreign investment. the question of whether i few foreign investment is a good or a bad thing what i have to tell you is this. when you are looking at foreign investment in the u.s., what it means if somebody else has dollars. they have wealth and they are choosing to buy shares in some american corporation or invest in putting together some business in the u.s.. if you are looking not as an alternative to buying goods and services from the u.s. which is what you are looking at when the
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u.s. is running a trade deficit, you are looking at it that thing. it's not that foreign investment itself is bad. the issue is not whether you have job creative investment and somebody putting up money to build a hotel in newport beach. the issue is not whether you have the investment or you don't. the issue framing it correctly is whether the investment is made by americans or foreigners. because most investments are profitable and feasible. somebody is going to want to do that in a market economy like the u.s.. the issue is whether the owners of those investments are going to be american or foreign. now when you run huge trade deficits you either have to borrow money or sell off assets. the accounting mandates it so that when you have a huge trade deficit you are inevitably going to have a lot of foreign investment in the country.
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for more on point it looks like it's a good thing but you have to remember that simply the flip side of the trade deficit because it means when we import more than we export we have to give foreign or something in exchange for all their stuff so instead of sending them back goods we get them assets. that is why you have australians that live in hotels in chicago and insurance companies in vienna and up owning 10% of this company in silicon valley or whatever. so foreign investment, it can be good or bad but you do need to understand that the accumulation of foreign claims on the u.s. means they own stuff and we don't own stuff and it means their net worth is larger and ours is less. it's not a bad thing but it reflects a bad condition that we have allowed to have happen. does that make sense? [inaudible]
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>> i will begin by saying i'm a retired political scientist and of course we always ask why the economist don't think about the politics of it enough, and so i will ask that kind of a question. it seems to me you have shown very well and i have learned a lot but what you show is that fair trade does work for certain people and even for certain americans who happen to be involved with this elite group that is maintaining it in position and yet at the same time you have have shown that it's bad for the united states and its economy in general because of the growing deficits threat to the quality of our dollar and so forth but also to the individual people who are losing jobs. you are taking as is your job
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and i can tell by the name of your organization a very american position but i wonder if even within those confines of not worrying that much about what it's doing to other people who in the global economy, even if we do focus on this, how would we do it? what would be the avenue for political action? do you think you are promoting accurate political action and you have taken it into consideraconsidera tion enough and maybe you have i'm not saying you haven't, or do you have or does your organization have some other ideas for how to stimulate political action that would create government change that would address some of the problems you are talking about? >> we are both coalition for prosperous america is a think-tank and a lobby organization so we lobby on capitol hill. i fly to washington a couple of times a year for that purpose
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myself. i can tell you that public opinion is with us both on democratic and the republican side. the congress is not yet with us and i can't claim that its easy-going. i do think it's a mentioned before that our hand is going to be forced at some point because the present situation is unsustainable. there are signs all the time that people are starting to wake up but you're not talking about, it's not a nearly billion-dollar problem. you are talking u.s. trade is billions of dollars a year so it's a very big thing that we are working on. it would not be reasonable to expect it to be easy. >> that was a good concluding question. thank you for all your well thought out questions. we also thank r audience here
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and on c-span and of course a special thanks to our speaker for his provocative and thought-provoking talk. and now this meeting of the commonwealth club of california in its 110th year of enlightened discussion is adjourned. [applause] >> f-35 is the most expensive weapons system in the history of the united states or the history of mankind quite frankly.
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it's an advance were playing, fighter jet that is to be used by the air force, the navy and the marine corps. it's the replacement for the f-16, for the air force and a number of other planes for the marines of the navy. it's supposed to be our new advanced all-purpose fighter jet. it is a plane that was supposed to be in the skies fighting. it's still in development. it's an incredibly troubled program. it's a program that has gone tens of billions of dollars over budget and i borrowed into this program as a way to write about the overall challenges in trimming the defense budget has this program is in some ways singular in terms of its cost overrides, it's delays in the way it's been structured to as a right and a piece, it's most effective defense advocate will not be all of its radars and sensors and missiles and stealth technology and ability to fly at
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superfast. it may be the way it's designed to avoid coverage in washington. >> german finance minister wolfgang schauble was in washingtwashingt on today. he said he expects the european economy to begin improving in 2014 lead at a slower rate than the united states in developing nations. mr. schauble is attending the g20 finance ministry meetings. from the council on foreign relations, this is an hour. [inaudible conversations] >> be careful. >> ladies and gentlemen i am carla hills. i'm cochair of the council on
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foreign relations and we are privileged indeed to have with us the honorable wolfgang schauble, a highly experienced german government official who is currently serving as minister of finance. you have his resume and we are running late so to maximize their time for conversation, i will be on diplomatically brief but let me simply say the minister has held for cabinet positions under chancellor cole. he served as federal minister for special tasks and the head of the federal chancellery and he served as minister of the interior. under chancellor merkel 2005 to 2009 he again served as minister of the interior and he is a long-standing leader of the christian democrat union serving as its chair in 1991.
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he has been a member of the -- since 1972 serving his parliamentary clip between 1981 and 84 and in 1990 he led the negotiations for the reunification of east germany. he is proficient in economics and law and vlad holds a doctorate of law and is written a number of books most recently the future of modernization, what we can learn from the crisis. mr. minister we are delighted you are with us and we look forward to your remarks and then we will pepper you with questions. >> thank you very much. sorry for being late. today we are, our hearts and minds are with boston and i hope it will be over soon.
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i have to make remarks on the financial markets that are going well in europe as you all know. [laughter] i will be brief to have time for discussion and therefore i just want to say we all remember the crisis that started in the united states in 2008 and in 2008 we all agreed it will never happen again. we have to learn our lessons. the summit to london and pittsburgh and a two the g20 meeting today in boston. we have made a lot of progress
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in doing this since then. we agreed that the reason -- there are three reasons. too much -- too much liquidity in the financial markets and too few regulations. those are the three main issues we are working on and i think in the regulation markets we made a lot of progress in the last couple of years. i will not mention in detail all that we have achieved that we have achieved a lot. it is not enough. in liquidity in the financial
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markets we have a little bit different opinions all over the world. that is the reason i'm a little bit late. [laughter] and we have to continue the discussion. what we learned in europe and the rest of the world, europe is very complex and complicated and the consequences of the banking and financial crisis in 2008 has been the financial markets -- the euro, the european currency is a very complicated structure. sometimes explain abroad how what works but i always give up because everyone says please, shut up. it will never work. [laughter] my only remaining question has
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been have you ever tried to build a common market, a fiscal unit, by 27 sovereign nationstates? have you ever tried to build a common currency by 17 sovereign member states? it would be easy to get it. i am quite convinced by solving all the meetings on the global level, the g20, what we need need in the 21st century is some form of, some kind of new global governance. we are at the very beginning to find better global governments.
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this may be the very difficult way, complex way of the european situation in the last 60 years. it's been a major success and maybe in some way an example of how to go on in building more international, global whatever governments. so, since markets predicted the european currency unit is really complex we have suffered major problems and all the problems we didn't have with the currency it
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became -- the euro crisis in the last three years, my understanding we have to fight in three ways. the reasons we have the global crisis as well. to hide indebtedness and in a common currency and common fiscal policy to major problems. therefore, we are working again and again with the federal department germany when we moved by it robbed majority of 500, 500 votes from 600 members for assistance and acknowledging programs to support countries. but in any program the member
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states fight themselves. we are using deficit and regaining competitiveness. a lot of members underestimate in the first years of the common currencies that the pressure on competitiveness in the cup, and currency result and evaluation. if you don't improve your competitiveness, you will have major problems. you will not feel it in the first years but it will happen and it did. therefore we always have to oblige member states and speak to european rules, to reduce deficits and of course in a balanced way to enhance their competitiveness by structuring structuring -- and then we can --
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we have built a european mechanism to buy time until they get regain access to the financial markets. it wouldn't well in the on the past year in greece possibly. if you look at it, the average deficit in the eurozone is the last three years. [inaudible] the difference in the labor costs between different member states has happened in the last couple of years. countries under a refo the markd
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a lot of confidence and all member states including italy and spain. therefore markets are beginning. what we are doing now is building a banking union. that is we have already agreed on mechanisms because we need a strong european supervision of banks because our banking is not only one member state but we need a european mechanism and a european supervision. we will implement a supervisory mechanism in the coming weeks since its already been decided.
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we have regulation on deposit insurance. we have european regulation and it is not yet decided but it's drafted and it's on the way. therefore we are working we are looking in the direction of the european banking union as well to split the risk of sovereign debts and the banking system as well. in europe as well and therefore i think we are generally on the way. there remains a problem and we discussed it yesterday evening and this morning again and again. growth in europe is actually not very convincing. if you suffer such --
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you need some time to overcome this crisis. if you promise to deliver immediate growth that is why we decided not to do it. therefore we need time to forecast the european commission that we will get to turn around in 2014. i'm sure we will. every economic figure are saying that we will. regaining growth for the eurozone has a hole in 2014. i would like to and what i have said this morning in our g20 meeting. no one should expect that europe will to live for high growth rates in the coming years. if you look at the real situation, if you look at the demography, if you look at the standard of living and the
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social systems, the cost of social insurance in europe are about double compared to other industrialized countries. if you want to change you will be killed because you have to make your policy on behalf of every society and europe is quite diverse. if you look at what we were discussing between the u.s. and europe, energy fracking. if you look in europe it's totally different to the united states. of course i will not compare the united states to europe. if we are honest about our demography, our population is -- and it's becoming older. we are aging.
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sometimes we say europe is aging and risk-averse. if we will achieve a moderate sustainable growth in germany for example what i've said years ago publicly, i don't expect more than the long-term sustainable growth beyond 1.5%. of course in some member states, in the eastern member states of europe there is much more necessity for higher costs. ..
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may not rely on high confidence. says much more dynamic. totally different to united states, of course, and now the situation is different. in europe we are working for sustainable growth possibility. we have the most -- we have been
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criticized that the euro created so much new year obviousity in markets -- so much nervousity in marks, -- markets, and i'm quite convinced the european population will sustain. a lot of -- some member states, a lot of political problems, but even in your nation is sometimes not easy to get decisions. in germany it's not easy because we have the second chamber, federal parliament. in italy, they have no government. much more successful without government. have been deficits for four
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years. but sometimes you need some, you get it, other times, in germany, to end with one poll that is quite interesting. you may know, you may have known that of course there's a lot of concern in public opinion, is it not the wrong decision to care for the european monetary, if you look at -- be have the highest polls we ever had, and shoo we stay in the euro or not. 70%, which is high, said, yes, we have to stay. we have to solve the problem. and it's a good basic. thank you very much. >> thank you very much. [applause] >> let me just start the questions by asking you, we have
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seen major initiatives in both the united states and europe to regulate banks. is more coordination needed between the two of us and if so, how would you recommend that we could achieve that. >> obviously more coordinate needed, but we try to find solutions in europe. we know that u.s. has in some way gone ahead, but we will work -- we discuss -- it's not most problematic issue actually, to have common understanding and recognizing financial sector. nevertheless, even in financial regulations, you can suffer what
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is normally in history of -- as soon as we have some progress, or some more -- the last crisis is far away, so less ambitious, is to ongoing, to speak of reforms. we have to. look, i tell to my european colleagues again and again, if we suffer another crisis like the crisis in 2008 -- my concern is in europe. i don't know about the situation in the u.s. in europe, my concern is, another crisis in such dime dimension would not only take market economy but democracy, the way of democracy and the rule of law, and therefore it's very important that we even
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oblige financial markets to understand that there must be regulated. we had a philosophy in the '90s and the less regulations the better for financial markets. at the end we had no regulations, and markets destroyed themselves. therefore without regulation it doesn't work. we need regulation and we have a beginning and an end that is only possible on a global. we look at the issue, we just raised the issue on tech spaces and -- it's not a minor problem. if the -- if they have asked for the deal and the outcome was -- companies which are on a global
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level -- the possibility, the option to avoid taxation are in this interconnected world of the 21st century, and tendeurope. so that we don't have different rules of origin and border red tape and all the mess that comes from three separate trade agreements. what are your views? would europe be accommodating to including mexico and canada? >> look, i am, as i just said, tried to say, very in favor of thinking in global dimensions, because i think we, especially united states, that even europe
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as a minor partner for united states, we have a responsibility to make the world stable. and this will not happen if the failed -- to fight against global divisions,, agreement may be helpful and may increase economics on both sides of the atlantic ocean. if we make it concrete i bet we -- in europe as well as united states, huge problems in detail. and -- i don't know whether you ever suffered any lobbying.
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and we have european buses. we all say we have to spend much more money for technology, innovation, and then -- but of course, you never touch the brain. it's a reality, and lobbying is very strong. if your finance minister has to work on financial regulation, the daily work is really interesting, and at the end you cannot really make a division between expertise and the lobbyists. it's totally different. i am quite happy that negotiations in germany not to the responsibility of the
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finance minister but the minister of economy, and i'm very happy to say what will happen. i would -- i think it would be better in our common interests not to exclude mexico and canada. that would be the wrong signal. we are saying it transatlant free trade agreement is not wto but only the first step in the direction. but we say we don't want to have mexico included, that would not a be as good a possible. >> thank you. professor. >> microphone. >> i have a two-part question. how much would you be worried about what is going on in italy. nine out of ten italians voted against the monte policies that is not yet the president, not
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yet a new government, there may be new elections. we don'tw result office them. public forces might win. what happens if italy goes in the wrong direction? do you accommodate italy or confront italy? there's been donate the eurozone how much you rely on bailouts rather than bail-ins, involve the banks, and there's not a mechanical template as needed when necessary, billings might be a positive solution. so what are the rules of the game in which case the banks sovereignty will be necessary. >> italy. italy is much more flexible than germany. therefore i thing italy will find a solution. the germans would be, oh,
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hopeless. in such a situation. italy, no. by the way, i don't share your interpretation of the outcome of last election to say they voted against -- 90% against this policy of monte. i think it was a vote against the political left, and if you look at what is going on in italy, you can imagine, you can understand, -- you have -- it's not -- i don't think it was a decision against the policy of monte. monte is -- was a successful prime minister, was a very good member of european commission, and i like him very much. but as a political -- to be a
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political leader, it's a little bit different. when we discussed, will you run for re-election, he said, no. i'm ready to stay as prime minister but i will not run for election. okay, that's fine. but -- democracy, difficult. late decided to run. maybe because -- so, i you will see elect a president, i don't know, but i'm quite optimistic they will do it in the coming hour, and elect a president. italy is in real economy, not my major concern in europe. i will not tell what is my major concern in europe. but italy not.
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they have huge private savings. they have in -- italy is number two, in europe. far ahead of france. behind germany, of course, but number two. so, it's a real economy and huge small and medium sized situation, italy has suffered the problem but about 150 years the same suffer, and always survived. italy is totally -- italy -- italian population is proeuropean. of course, silvio berlusconi
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is -- we will not do it. you should ask why has berlusconi been so successful for more than ten years? interesting question. changed? no. the story of -- if you look what happened -- what has been agreed, even in washington summit,too big to fail will never happen. if you translate the principle of too big to fail in reality, it means the normal has not said, as long as things are well, as the banking make a lot of profit, and the bankers know, and as soon as they have a problem, too big to fail, and
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decided it never happened, and therefore it will not happen. therefore we need the liability that will be even part of the european mechanics. and of course, bond holders later on secured depositors and then the member states, and then if needed the community of europeans. but it's obviously politics. in principle everyone agrees. as soon as possible you make the principle concrete and n cyprus, that was a totally different situation, for example, compared to greece. in greece we had a huge -- we
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need a haircut for gross, -- for greece, and spite all over the world, actually not even disputed. it has been worked well. without a haircut for greece, greece would never have been had a chance to regain access to market. in cyprus it was totally different. the cyprus business relied on banks which addressed its developments with high interest and low transparency. and the cyprus banks borrowed a huge amount of cyprus bonds, in the years got a lot of interest for bonds but the speculation went.
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but should the european taxpayer pay the bill for this? it was totally clear, but in the beginning when it became concrete, there were only two who are in favor of bail-in to make it concrete. everyone is agreed. the imf and the german government, and then we had to wait a long wait to try compromises and all this nonsense. in the end we got and it now it's fine. and a real chance for cyprus to regain a competitive plus for business model. i'm quite optimistic. of course, suffer some years un avoidable but it will work. >> i'll remind you to state your name and affiliation and you're limited to one question. jacob.
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>> jacob, jp morgan. thank you, mr. minister, for a very sobering and refreshing analysis, which is in stark contrast to some of their cheerleading statements made in some other meetings, so thank you for that. you started by saying that europe will grow, it will be for the long-term, it's aging and the like. and so what bothered me so much pressure on the ecb to expand. we all know that this will not help competitiveness of any country, where the focus on competitiveness has to do with structure measures, andith poor and weak politics, we know it's going to be very tough, and i agree that italy is very
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flexible, maybe flexible in ideas but not flex nibble the economy. >> well, not so -- in the economy. the economy is rather -- >> i have a quick question which is the following. the achilles heel in the past crisis was the weakness of the financial system, and the weakness of banks. the solution is to strengthen the banks and the best way to strengthen the banks is by having them hold much more capital, and i think that's well-received. the problem with the suboptimal growth of europe, if you increase capital requirement ratio now as is required for long-term strength of banks, you reduce their ability of banks to lend and support growth. how do you square that circle? >> until now we have no problems
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for -- to full credit demand all over europe. there's no credit -- of course, the banks are moving carefully. second, european banks has already rising a lot of capital. i have to add the european banking -- europe has been a little bit over-banked. therefore one of the advantages of the crisis is that we have some reducing of the banking sector in germany, for example. we used to he this so-called bank. it's hard to do. it's -- a lot of problems but i
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will not discuss on the german problems. compared to others, we are relatively comfortable. the same as happened in cyprus. it does happen, actually, and that it has to go on and suffer and toned do it -- tend to do in a reasonable way, balanced way. by the way i agree that we will not relay in europe on monetary policies. some would like to do it. and some others will not. and up to now we have never -- we have in any case -- you can examine it. in all numbers we have the chief a lot of structural reforms, but spain has decided, it would -- has never expected that it would happen. but italy did monte government,
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but totally adverse what has happened over decades. and of course i can't tell you the story of the violence, even france has made a lot of results. france has made the social conflict with major trade unions and entrepreneurs, totally new for france, because they learned, like some people in -- it's after the financial presence, so-called model of microeconomy from germany. it's just not so badly in other coming crisis because -- and reduction or limitation of the confrontation between the different parts of the society.
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it's better to get in with france. that is a knew challenge for france d new challenge for france but the french like the revolution. if you ask a french the biggest achievement in french, it's of course the revolution, but for reform process it's difficult to get the move -- but in pressure by our -- try to tell you how we fight the euro crisis. there's no way that beyond fighting the causes we -- and since all is not only differences, the finances department, the unique structural reforms, and we of course may be compared to u.s., our labor market remains very regulated.
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no different to united states, but together we will -- we know we need a strong united states. we need a strong united states. because you are the understandable -- yes, you have a huge responsibility, not only for united states, but for the whole world, and you need partners and we do whatever we can to be a reliable partner. >> this is for the front table here. >> thank you, mr. minister, too very illuminating discussion. let me -- >> your name. >> jerry livingston from the german historical institute in washington. let me discuss a german problem, the role of the federal constitutional court.
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in recent decisions it has warned against, strongly against, the transfer of sovereign german powers, particularly fiscal powers to the european union, and into the very admired institution, i guest most admired institution in germany. will this not be an obstacle to the transfer of fiscal powers to the european union? >> you are right. you know the germans believe in courts and they believe especially in the constitution. since political clout is not very will estimated, constitution is with the german court. such a high expectation, always a temptation, even for judges, and of course, it's sometimes
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not really -- it's a long-term constitutional court. it's very -- we all can trust that you will rely on what is the constitution of germany, and the constitution of jeremy -- germany gives the constitutional court this role, but only on the constitution, and the constitutional calls for the judges, no, in german constitution, since the very beginning of 1949, the germany want to be a member of a united europe. it was in the very beginning since '49 already, and therefore we have a clear bay is? our constitution to transfer sovereignty to institute.
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that's not disputed by constitutional, of course. they are very carefully, that's what you expect in all decisions. our constitution, so we follow parliament because constitution as long as we have no fiscal policy in europe, common fiscal policy, the final decision on budget has to be to the german pair limit and therefore the german parliament has to be involved in the german decision. therefore, it's not possible. and i think this decision is right. otherwise we have to change our constitution. some day we will do if needed. up to now our constitution is ryan for this european politics
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we're doing. therefore, now our constitution and court is only a challenge for politics, to politicians, to understand. we -- it's not a good way. it's the public opinion only plus judges. it's got it's across judges but would be better if there was a minimum of confidence through political leaders as well. >> thank you. doug rutger at the peter institute for economics. if we go back to banking unions as the next most important step towards ultimately fiscal or political union, and if you look at the necessary components for the single supervisory mechanism which you rev henced a as step and then the resolution mechanism and the deposit guarantee scheme could be part of the broader banking unit. it all really relies on the integrity of the bank balance
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shirts subsumed within the union. so my question to you is, right now, whether it is considered the legacy asset issue or otherwise, there's a disconnect between the interests of national supervisors to dig into and disclose fully the asset quality issues that may be within their banks, and the broader banking union which might share that burden that would otherwise be born by -- borne by the national governments if the disclose the poor quality of the balance sheets. having the strongest balance sheet in the european union, how do you balance that to get real banking you need the bank balance sheets to be transparent and believable and we're not there yet. >> in the supervisory mechanism we have decided that a defined figure of banks in all european
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member states well be supervised not any longer by -- but by the single supervisor mechanism, and look on the balance sheet which eba does not have on the -- the legal basis of the european banking authority, but the single supervisor will have. it's a very complicate issue of legacy. we have -- we discussed it broadly in dublin a week ago, in our informal meeting in dublin, and i can tell you not to mention all the details now, but i can tell you we on the way to defined. by the way, i would like to repeat, don't expect that as
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long as the situation in european is at it is, the given situation, the european banking union is the same like the federal reserve in u.s. europe remains a very strange and very specific construction of combination between european authority, with a lot of confidences, and member states which remain -- not 100%. no european state is really sovereign if you explain in some -- political leader would never understand it. but you have this, of course, totally different, and in europe we need this new form of
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government, and we all agree on this in principle. in details we fight a little bit. but it works, and european banking union will rely on them. we will help them and european law implemented. i hope the u.s. well. then we will have to single supervisor and european mechanisms as well, and european deposit insurance, and at the end we are perhaps national responsibility, reminds me of liability, because otherwise we create the wrong incentive. disincentive, to tell a member state, don't care, europe takes the bill. at it the wrong incentive.
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you have to be careful. you take part of the risk. and each state is not enough, the european stability. by the way, someone who follows the discussion in germany may have used that -- was a huge discussion on the target. it happened in the last couple of years. what does it prove? that imbalances in competitiveness are -- we have a lot of pockets in the figs. >> advisor. >> he was ambassador when i was a member of core government. >> now you leave without -- >> you helped me solve a lot of problem. >> we did. >> we did. >> you mention today, cold war,
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exchange of -- >> we'll have a second session after this one. >> you only get one. >> richard burt. mr. minister, i speak for a lot of people in the room that recognize the role you and the chancellor have played in the leadership on the euro crisis issue but this is not solely a german responsibility. to my question is about two partners of germany. one, france, one has the impression from washington that the french don't necessarily have the political or the economic strength to continue to be a close partner of germany in the construction of europe, and secondly, there's the question of britain. now, they're not a member of the eurozone, of course, but in talking about the evolution and the future of europe, the british obviously have a role to play. but are the europeans and the
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germans prepared to make the concessions necessary to keep britain in the eu. >> look, europe -- as a german member -- member of the german government, i am condemned to cooperate with france. [laughter] >> i well tell you -- you can't -- it's european history. it's the core of european integration. you can't build -- once i had a discussion with a good friend, actually prime minister in finland. and he told me, oh, should divide the euro sewn. i said how to deindividual in the i said, answer one question
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in which part is france? he -- one community then he said, you are right, we can't. if you look at a map of europe, the answer is clear. cooperation between france and germany is the key for european integration. it was at the very beginning of the world war ii, and it remains. therefore, when my french colleague came to berlin the day after he was appointed, we told, what a silly decision of french voters, to vote for the socialist government and he said, yes, the opposite in germany, oh, you would never vote for the party. but we will have to work together. we are condemned to work
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together. we do it. it's what the french and the german know. so, i just have mentioned that france has -- you have to understand, you have to understand germany, which is maybe the most difficult thing. you have to understand france, and france is difficult to make social reforms. it's really difficult. it's easy to give advice, do blah, blah, blah. you can make a lot of -- but it's france. france is a wonderful country, but by the way, it makes -- look ex-if you look at foreign policy, security policy, you can see europe is, germany is much more for -- but never can do because we have our history of france, therefore we have to work on the spaces.
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italy, without france it will never happen. so, we will do. so, of course, i would prefer to have a stronger position with france actually, but by the way, i am optimistic that they got it, they are doing a lot of making reforms, as they implement some legislation, mac -- make a lot of decisions, so not have -- they can pay to implement to cut expenses or reduce the deficit by cutting expenses and the relation to two-thirds cutting and one-third raising taxes, maybe you can send someone from the negotiation team to palace to help to find common solution
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to overcome the different positions. so uk, it would have been better from the very beginning if uk had defined itself as part of the european continent. but uk didn't. but of course, if you mention continental europe, not uk. if you look at weird situation in -- it's fine to criticize david cameron but if you look at the real situation of the party, and he has to be careful. i think -- my answer is always quite easy. the more weed and -- we succeed
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in our common european -- the uk will join, the more difficult it will be a little bit -- suffer a major discussion into society, you can follow it again and again because it's -- even history has changed. and france and uk had to learn in a much more difficult way to change the history after world war 2. the germans had nothing to learn. we were -- at it totally different. i pay respect to france and uk, and -- but nevertheless we -- if you look the role of poland, for example, the role of the new member state inside europe, it's a weird success story. don't underestimate.
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of course you can see in member states some heritage fromormer times. in hungary as well as czech republic or slovakia. but if you look at what hat been achieved in separating czechoslovakia in a peaceful way, no one would have expected that would be possible, and now close friends, close friends. and even the former yugoslavia, after all this terrible war in the '90s, we have found the way to -- europe success story and it remains very complex, complicated. >> minister, we could keep you here all afternoon. we are enthralled. we're going to invite you back and hope you will come.
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thank you so much. join me in thanking the minister. [applause] >> i strongly urge you to come up with a number to tell this committee and the american people, we have a responsibility as well, and for you to say, well, we're just going to see how things turn out, it will determine the size of the post -- 2014 post office, i believe this is tragic and terrible mistake for which we may pay a very heavy price. >> senator, can i comment on that? >> sure. >> senator, to be clear, i didn't say to leave it complete he vague. we are today advising, assisting at the battalion level. we're going lift off to the brigade level this fall. the number in 2014 is inex-trek blue linked to the level we need to provide advice and assist -- >> you have to wait until 2014 to determine that? >> we do not, senator. what i suggested was that this
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is the afghan's first summer in the lee. i believe this summer will be the bellweather for afghan performance into 2014 and beyond. >> this weekend on c-span, marine general joe sun done forth on expected 2014 troop numbers, saturday afternoon. at 8:30 p.m., the dedication of the gabe zimmerman meeting room. he was fatally shot as he worked the guckman who wound hissed boss, gabrielle giffords, and from london, portion office former british prime minister margaret thatcher's funeral service. on c-span2 2 this weekend, become tooth heads to los angeles for "los angeles times" festival of book. and on c-span 3, american history tv. looks at revolutionary printing
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from the american society in massachusetts. sunday at 7:00 p.m. eastern. >> next, japan's economic outlook with the company's deputy prime minister and finance minister. he was at the center for strategic studies in washington, dc the new prime minister, minister,-sinshow has established abe abeonomics. >> i want to say a hearty welcome to a very good friend. aso has been here with us many times in many roles, and he comes now as the finance minister at a time that is a remarkable significance in japan. everyone has heard about the so-called a it's going to
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require this man to bring the structure in to bring around this transformation. this is a very big deal and it's important for japan, obviously, very important for the united states, and we all need to learn and listen carefully. we were talking just as we were coming down about this metaphor that the prime minister used about arrows. i don't know if you saw the ft this morning. the finance minister talked about ba suing -- ba suing -- bazookas. he was a marksesman in the olympics but he is now. we are delighted to have him here. [applause]
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>> thank you, thank you, doctor hrmre, thank you dr. green, and thank you all for coming to join me here. i am back, too. [laughing] >> when you say that each japanese prime minister spends only a year in office, you are talking about me. when you say where is japan politics is like a revolving dew door you are talking about the shinzo abe and me. thank you very much. but you can see something not so bad here. you are now looking at an
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administration that has two former prime ministers, and three former party presidents. you must envy us because you can't do anything like that and present your system. bill clinton vice president of obama, very difficult imagining. now i will start off by touching upon our alliance. my view is that something is wrong when you say that the u.s. is always on the giving end and japan always on the receiving end. about provision of the security and our alliance. the japanese stand tall as an equal and responsible ally to the u.s.
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the japanese must work hard as a guardian of international common goods, peace, prosperity, and democracy. in fact, my grandfather's grandfather as a aspirations,y september 1951 in san francisco, the security agreement. he hoped that one day japan could work with the u.s. as an equal partner to sustain the liberal international order. 62 years later, that aspiration still holds. it is my belief that japan has its noble responsibility to enhance peace, hpiss and democracy in the world.
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that's why, ladies and gentlemen, japan must begin its economic power. that's why we are working hard to turn around our economy. pushing what you call abenomics. make no mistake, we are pushing abenomics, not only for the sake of the economic reason. we are doing that precisely to make japan your reliable ally and a responsibility guardian of peace, prosperity, and democracy. that's all surprise to the tpp. in much we said -- we said that we work -- be joined the tpp
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negotiations. last week, tokyo and washington reached an agreement about some of the issues we needed to solve in advance. now i am very much glad that we are on the right track to enter the negotiations. yes, the tpp is about economic integration. but it is also much more than that. remember, that japan is still the second biggest democracy economy in the world. [laughter] >> if bound together under a tpp, the american and the japanese can make the world a much better place. the u.s. and japan bound together, by the tpp, can emerge
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as a mega stabilizer, across the pacific. think about our combined size. it is really mega. once again, for the purpose of those, japan must be stronger. now i will spend the next couple minutes to tell you about a so-called abenomics. the logic is plain, simple, and straightforward. first, the bank of japan eases money. second, the government comes in with fiscal policies stimulating real demand. and third, the government introduces a growth package, including tpp, massive
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deregulation, and other gross plans, putting the growth on the sustainable orbit. that is it. that is what you call abenomics, and it's three arrows. by the way, shinzo abe's son was an a athlete in his college days. to quote abenomics, kind of combination of arrows fits in most nicely. i will not a archery player. i was a skeet shooter, and the present at the 1976 olympics in montreal. so i call them ba suing coulds. -- bazookas.
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... that is what we are aiming to bring about. if you are still in doubt about what i say, it is probably
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because you have never gone through depression. depression, economic depression. love me tell you a bit about what it was like. it all started when the bubble collapsed in the 1990s. in 1989, about 389 -- sorry, i made a mistake. about 39,000 it fell down to as low as 7000. the major cities in 1991. became louder.
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as a result, many banks have negative equity. many companies also have negative equities. banks are interested only in reducing their balance sheet. companies are interested only in pain that that, their debt. rather than investing in new ideas or products for future growth, and they minimize cutting waste and so on. unions wanted no layoffs, so they chose to accept a pay cut. gradually, money gained value to
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kurds. growth slowed because no one except for the government was willing to invest. a vicious circle. it has became very persistent. i missed you are losing temperature. it is early stage. it does not feel so painful. your wage may not grow, the cpi, consumption price is also flat. so your purchasing power does not decline notm
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it is too late when you have finally become aware that you are a hostage and cannot escape the vicious cycle. because it is a slow process, depression could bring no alignment, unlike inflation. that's why deflation is much more humble. so what ought to be done? before the december general election, we thought the most important thing would eat to get in the mindset of japanese at the outset. we got the economic landscape should be redrawn automatically so people can be willing to take risks. who is that that time the era of
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three bazookas and one flail swoop with our campaign platform and push it hard during the campaign and the result was a landslide victory. at long last, borders gave us than they. strong enough to do both things that were a lot time coming. we are done. nothing left other than just voicing our policy package and our wealth to do it. interestingly, the market started to respond.
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it speaks volumes about how important it is to change people's perceptions and mindset it is true that japan is only a country that has gone through deflation. none of the nation had the deflation and station after a second world war ended. if you see prewar examples, i must mention japan is that the few countries that have succeeded in containing deflation. john maynard keynes published his general area in 1936. prior to that, there is someone
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in japan who did keynesian policy in the early 1930s. his name is chris kara czajkowski with finance ministers and one-time prime minister in the early 1930s. tchaikovsky save japan by doing exactly what we are doing now. his bold monetary easing to a power. like a slave, hastert dated deep and fast, so much so roosevelt would say later that takashi had
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given the administration. i'm on our predecessor, there was someone who wish to further his first steps. now back to the real china says. it started -- then head of the doj, bank of japan maa shared a joint statement for the first time in japan's monetary history this year. in that joint statement, the doj
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introduce and recorded to price stability target. the government place to run the kind of macroeconomics and fiscal policies flexible and responsive. now the government establish old fiscal. what we did thereafter -- joint statement. anyhow, the first bazookas as monetary policy.
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i will not say more about it. you may just want to open your newspaper or magazine. they are now telling a lot about the economics. the new governor of the bank of japan. we allow glad, first of all is good communicator and is well-connected in respect name of the central banking community. let me tell you more about the second bazooka, the fiscal
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policy. please note it disappointed we're not making a big government. it does not apply to the japanese situation. the tax reduction. the situation in japan is more complex. when the private sector cannot stand and only save coming that government must be the spender of the last result. we put forth a large-scale supplementary budget in 2012. public works are not only
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important, they are vital. unless we spend more and do it now that are all more than years old. at any given time, they may follow part. you have exactly the same problem in many teen 80s. but also like you to remember what people said about the golden gate bridge, hoover dam and so on. when construct did in 1930s, many people are simply establish an extraordinary. after the creation, hoover dam continues to draw a more than a
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million visitors a year. without that, las vegas would have been a very different place i say. without golden gate bridge, the tourist economy in san francisco would have been much smaller. so we are investing into her secret deposition when we do public works. that is my definition for public works. i also believe our tax policy should play a bigger role. in japan, then places are still extremely long i get the companies to invest. so that cuts again as a result
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of deflation. so my ministry introducing new arrangement. clear domestic business expansion, you can get tax deductions or special depreciation. if you invest more in development, become a signature tax reduced. furthermore, if you hire more or pay more to your employees, you can get a tax benefit. resource or not that we do what we do to domestic demand, not to increase. japanese economy experts only
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11% to 13% of the gdp. the u.s. or persona, but sooner than authorized at the nation although that the world. the chairman maybe 40% of gdp about 25% for agencies. there is another power that is the power of legislation. we are lucky that the ex-prime
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minister. he and i have met with a whole bunch of ceos and they should her a pastry kiss them and hire more and pay more to their employees. it is working for the first time in many years an increasing number of companies are willing to pay more. however, getting rid of the deflation mindset alone cannot warrant long-lasting recovery. when i sleep peoples expectation to sustainable economic growth and for the purpose, we must address to downside risks.
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inflation without growth. to come interest rate hike without growth. let me understand one by one. you now have racing cpi, which you have no pay rise because your economy is not growing. that's a bad inflation. people should suffer her. it is right here the bazookas should comment by. if you recall a package of enhancements policies. i know it is hard to come by. i am not saying we can't really easily. still, it takes us to look to
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see who you ae. then you realize you took them out. they believe that to the duration you better be an optimist rather than senate are pessimists. one thing in common is both of us are true believers in chip pan intact resources. zero, what japan can offer. the bullet train the average
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delay of 32nd. but since its launch in the 64, the service has absolutely no injury for the accident. there actually are following you, which could connect new york and washington d.c. have 40 minutes. not 40 seconds, 40 minutes. next come the code for a project. in my part of the world for singapore, hong kong, china. i have said all the time to the
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primary japan that they could make a giant expert industry. also content industry. i hope you know this business has become a french noun. [laughter] not english, french. both music and song. some of you may introduce to be given to non-japanese and furthermore some of the small come in a subject and are amazing. in tokyoand the monopoly of the
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market. the company produces as sharp as the mouse of the mosquito. you don't fear any pain. how many of the ways are there is her wife. few other countries have such a world-class companies, only in japan hughes have family businesses. the challenge for government is as to that may go.
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we should simply that the companies shine themselves that must be the course of our bazooka. bear with me a couple months more. give us their proposal about the innovation. i am looking forward to the proposals. something that could dramatically change the prop to prevent them shaping pursuit of close policies is most
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important. what about the bad industry hayek, which is a second downside, it is evident as monetary easing. without putting the fiscal house in order communities your confidence and tries. they received 200% related to gdp. the fiscal prudence may be a sudden rise in the interest rate. no one will admit that, needless to say. however, it sure does there are only a handful of countries that
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confound their entire government that in their own currencies. most of the countries must issue bond denominated in currencies other than their own. they are pursuing don and their currency. other such countries and the u.s. united states of america. where then, what is this important as first of all to lay out a credible roadmap for reducing the debt and second of all stick to the road map and went confidence from the market. i am proud of the government
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agreement, looting and opposition parties issued last year. the government should raise the rate of the conception from 5% to 8% in 8% to 10%. this should take place a year from now in 2015. no one wants to see tax rates becoming higher. it is the most unpopular thing to do for the politicians. i think it is the maturity of
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japanese democracy who have made it possible for the parliament to pass the bill and i am proud of it. also earning here with the easing was made possible on one condition. the government must pursue the fiscal prudence. that is what we promised in the joint statement and mentioned earlier. in the next two years the doj will buy a huge amount of the unscalable sophia. the market must become more nervous to see whether or not the government is committed to improving its fiscal situation.
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so for the fiscal prudence is not a test for the future. it is a clear and present one we have to start tackling now rather than later. i am determined to facilitate the environment and basic conception tax rate, based on the provision of a comprehensive tax reform. you must also address japan's own entitlement reform to that the growth of the government expenditure in check. previously at the g20 meetings, together with other member nations we stick to it.
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wait a minute having the balance ratio to gdp by fiscal year 2015 than that in 2010. we also aim at achieving by 2020. we are going to publish medium-term fiscal consolidation plan around the middle of this year. the second interest rate hike is avoidable. economics should take deep root for the economically to seek sustainable growth. finally, before conclusion, let me say only a few words about
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what kind of country japan not to be. japan must be a place where the road needs effort. japan must be a place where risktakers can be given opportunities not just once, but many times. also, ex-prime minister present the chance for the second coming in japan. japan must be at face and a sense shotmaker cain mused, japan must replace innovation. japan is not the cutting edge of a medical type ologies. to cite what she had been nobel
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prize winner said that is the closest to bringing the stem cell technology to the bedside. that is about it, ladies and gentlemen. once again, we are doing all that not only for the sake of the japanese, but also to make our allies stronger. at the end of the day, the u.s. is the biggest economic economy in japan so the second. together we can do a lot. this iso limit. thank you very much for your patience. thank you very much. [applause]
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>> thank you. i am michael green from csis. 25 years ago about this month i went to work in the japanese diet and make them pass past taro aso to make sure you didn't get any trouble. he failed, but i was correctly informed he was a rising star was not told you the japan's, let alone a skeet shooting bazooka wielding, but it's a good thing for japan and the economy is on the job. and they asked the first question about the third bazooka. i know you're waiting a few months. is something happening in japan on july? i may wait until after the election and gathering views of
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experts, but could you say more about your personal philosophy are principles that would guide the third zuppa of the long-term growth strategy? the prime minister also mentioned women's empowerment, which could add considerable sustained economic growth for deregulation. what are some of the principles he think about for the third zippo? >> this habitat and [speaking japanese] >> translator: this question might be better addressed to
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someone else but myself. i hope you can wait another few and hear from the people responsible for ability of the right now and look at the most accurate or not. as far as i know, i will try to answer the question. [speaking japanese] [speaking japanese]
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[speaking japanese] >> translator: well, at this moment a number of people are coming up with wonderful ideas in march on yours and it mainly has to do with deregulation of regulatory reform, particularly focus on the medical care area at the moment. in japan there is already a production going on for producing nursing care robots because verdi have to take
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knowledge to which enables people to think something in their mindset that would drive whatever direction you see them as. already that technology has been developed in japan. the idea is to apply this to be used for the nursing care robots but unfortunately at this moment we have a ministry of the health labor and welfare point is not named about the development. of course they are good at developing the drugs and pharmaceuticals, said they are trying to apply directly the pharmaceutical oriented development system to the development of the nursing care robots. many times although the clinical trial and experience have to be performed by the time approval is given robots will become highly outdated so this is not the way to go, so we are going to introduce another system to
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overcome this example. suppertime [speaking japanese] [speaking japanese]
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>> translator: a robot here is one near example another example can be found in the water supply system. and the road of countries apart from japan have made private companies to have the assistance. in japan, the hope purview belongs to the minister of internal affairs and communication that is very exclusive area debut the influences on. japan is a country which is known for being successful in recovering that 99.99% of water charges, so most of them is very new water. the systems are run at either the state or municipality's, so we hope we can privatize the sirius as well. the public sector can construct structures like schools, but we
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can live the private sector to brown. >> thank you. matthew. >> we have microphones. macko said an example by identifying himself. >> i innocuously sis. i have a question about the first error bazooka, the first to comment on your answer to the next question because it is very helpful you are specific in your answer to the question about the growth's graduate and i appreciate that. you like monica and if i may cite the most famous american monica,, there's a regular installment in charlie brown faces his friend lucy and she's holding a football and encouraging him to come pick us up all and he wants to kick the folk out, but he doubt she will hold it. you think she can take it away because every year she takes it away.
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hence a flat on his back. a lot of us in washington are like charlie brown. we want to believe, but this one experiences in in the past with the growth strategy has not spent specific or has not been carried through. everyone is looking forward to the specific elements that are credible. so that is my comment. can you give us more flavor of the discussion today in which each one a about monetary stimulus not just in japan, but advanced economies and the impact of global markets and whether there is significant concern about that issue in any agreement to aggressive monetary stimulus. sub [speaking japanese]
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[speaking japanese] [speaking japanese]
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>> well, with regard to this issue, the meetings are being held to reach the finance minister said the previous one held in february and the second one has been hot just not washing to. as was asked in the question, of course i wanted to know about the impact of the policy for the advance in japan because right now the interest rate on the gdp is at .5%. not 5%, but .5%, so people might induce a situation whereby massive flow might end up in the emerging market economy. the [speaking japanese]
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[speaking japanese] >> translator: so when we are talking about the basic hours, the primary aim is to the japanese economy out from the deflation and recession. that is precisely the priority number one for us. so if it might appreciate, this is only a matter typewriter of what we are attempting to make. these are to the people who wants to know more about measures in rms understanding has been gained.
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the [speaking japanese] >> translator: magistrate to paragraph 4 and perhaps i can gain your understanding. [speaking japanese] sustainable and balanced. some countries have taken steps to stimulate it to be since we last met in moscow. in particular, japan's recent policy action are intended to stop deflation and support domestic demand.
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[speaking japanese] >> translator: the portion i just read your response to the answer to answer your question, what she might have contained some doubts. >> arthur. >> thank you. i'm arthur alexander. i.t. should be an uld be an ecot alexander. one of the interesting problems you face and i do not envy is the tax going up the following year and you are aware that will take a big hit on function of income that would have a
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negative impact on the economy and i'm wondering how your balance to these two different issues of fiscal consolidation and demand. [speaking japanese] >> translator: i think you have hit on the most part in point because whenever we meet to try increase taxes does not result in an creasing tax revenue. we have examples to happen in the past in many numbers. [speaking japanese]
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[speaking japanese] [speaking japanese] [speaking japanese] >> translator: back in 97 and
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function tax was raised from 3% to 5%, we initially thought by doing this will receive the increase in the tax revenue by 5 trillion yen. however, it turned out to be a date stamp and the conceptions and the result the economy had gotten worse. it is to be in 1997 the total tax revenue raised from the corporate tax, income tax is 41. in the following year, and this reduced to 37 trillion. it didn't. instead we end up losing 4 trillion. >> translator: [speaking japanese]
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[speaking japanese] [speaking japanese] >> translator: m. last year the party dpj as well as lep was
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able to strike an agreement to sign the agreement and that was the 18th provision in a given that document and we have to see first about the pickup and economy, otherwise not raising the consumption tax that would take place. whether to do it or not will be decided this coming october. by october, if we end up having picked up an economy done, we can raise the tax. but if it doesn't work out that way, then the timing of the attacks will be deferred. so is shown in these kinds of responses, we have serious considering of the implications of tax in greece. you can make a decision to say definitely that of the debased
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definitely. we have to allow some more time to make sure the economy could really get better and then the judgment will be made. >> we have time for a very short question. >> thank you for speaking today. you mentioned economic growth for japan. i was wondering about the agricultural dirt, specifically price, soy, beef and how they will impact negotiations going forward. [inaudible conversations] [speaking japanese]
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>> translator: i know tpp started day dl ahead of nominated entirely. for example in the case of the united states to look at the sugarcane if it is the class 100%, the sugarcane produced the southern part of the united states who could not completely due to mexico. [speaking japanese] rossbach
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>> translator: likewise, look at the beef. if beef is 110, only peaceful takeover for sure. so there's going to be no cowboys left in the united states. the situation is totally, utterly inconceivable. [speaking japanese] >> translator: any country has faced in the vichy to themselves. for example, the united states has been requesting japan to do something about the automated area because it is zero, but the
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united states would like to maintain 25% on the tracks and a 2.5% on the passenger cars. this is a condition the u.s. disasters to keep. [speaking japanese] [speaking japanese]
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[speaking japanese] [speaking japanese] guatemala [laughter]
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[speaking japanese] [speaking japanese] [speaking japanese] >> translator: likewise the upper cochair of japan a person on we have to decide which item in the agriculture is set to negotiation to be help from now
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on. they might decide eventually a man or a fight for subsidy of so forth. but there is a positive side to the culture as well. look at the strawberry by japan. just ordinary strawberries, the one piece of the strawberry with the price of 300 or 350 yen apiece in shanghai or countries in the area. look at one package with 300 for example. if it is different, then you can expect high price. so what piece of the strawberry will be answered much more in some of the countries in the world. and the site, farmers will have a way to make a profit out of the products they make. it all depends what you are talking about.
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there are areas where competitiveness can be raised and maintain. in the case of rice is welcome and thanks to the global warming, the island in japan is now joined benefit as a result and is able to grow a much tasty rice. in the past, producer rice that was known for the most siliceous kinds of raise and no good reputation at all. one year before that, produced rice that has been given the gold price for the excellence of their products. why? because you can have a much bigger paddy field to raise rates, and there cultivation area is 20 or 25 times larger than elsewhere.
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when this way, even rice could claim a much more high competitiveness in right now because of these changes and so forth, rice production area is really shifting much more. the areas than this out will be shifting their clocks to the first area like strawberries for a vote. since i live in the southern part of japan and look around the areas, i can tell it is interfering. >> thank you for a comprehensive , concrete and candid education. they give you a chance to get to the airport in their next appointment. you copies up front and on the website. please join me in expressing our
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continuation. [applause]
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>> shoe is very bright. she was apolitical, which is why she and lincoln got together in the first place. she spoke several languages fluently. she was extremely well-educated, so she had all these things going for her, but it suffered a series of tremendous emotional lows. >> her four sons died. one of the white house after her husband's assassination is sitting next to her at the theater. the kinds of great the woman was going through his amazing, but folks keep minister for that, thought she was crazy. well, we found out she wasn't crazy. mary todd was a very significant person and i hope someday to get a better view of the range
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things that influenced her life, not just the tragedy. >> economist ian fletcher is the author of free trade does not work and "the conservative case against free trade & coalition for a prosperous america." you talk about america's trade deficit at the commonwealth of california in january. this is just over an hour. >> good evening and welcome to the commonwealth club of california. i'm norma walton, chair of the clubs international relations forum. we also welcome our viewers on c-span and invite their audience to visit us online at commonwealth it is my pleasure to revamp our
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speaker, ian fletcher. senior economist of the coalition for a prosperous america, a nationwide grassroots organization 2.5 million numbers dedicated to fixing trade policies and comprising representatives to agriculture and labor. he was previously research fellow at the u.s. business and industry council of the washington think tank founded in 1933 and before that, an economist and private part is hedge funds and private equity firms. educated at columbia university in university of chicago, he lives in san francisco. ian fletcher regularly writes a lot posts about online publications. his blogs can be read at the "huffington post" world net daily. his most recent book, free trade does not work published in 2011
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and is available for purchase here tonight. mr. fletcher will autograph copies. what scares a warm welcome to the san franciscan, ian fletcher. [applause] >> high. i'd like to begin by pointing out to everybody but america's trade deficit is $500 billion.3 trade deficit is $500 billion. the reason i start with the fact is to make crystal clear that if we've got a trade problem in this country, that is to say for trade relations are not in good order it's not an obscure little thing. we've all been two weeks if not months of discussion of the so-called fiscal cliff and if you like him much there, this is a comparable data money. people have been with the fiscal
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cliff would result in a huge amount of aggregate demand you take it out of our economy. thanks to our trade deficit, look at a comparable amount of money taken out every year regardless of what had been misspent coming on for years and years and years. the trade deficit is the difference between what america exports and what we import. what it really means to say we're $500 billion out of balance with the rest of the world as we are consuming more than we produce to the tune of $500 billion a year. the reason that is true is the only place you can get kids to consume as you make themselves or in or from someone else. this is yet another way in which the united states is a living beyond its means.
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those remarks were to try and get you interested, though i do have to say people don't usually pay money to hear me speak. so i'm assuming you find this somewhat interest in. if you can look at free trade, once you understand there's an issue here at the trade situation, if any of you have a wallet on you, the guy in the $10 bill as alexander hamilton from the first secretary of the treasury, the intellectual architect of capitalism, one of the founding fathers any devout protectionist pacifist abraham lincoln, virtually every president prior to world war ii. what this tells us is if we have a trade problem of what has this idea that free trade is taken for granted its best policy, come et cetera, given for most
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of american history americans did not believe in free trade, did not practice free trade and during that era, america was the most successful economy in the world. we have provocation from economic history that may be economic theory of what passes in the editorial pages that correct. how could the united states have repudiated free trade for so long, then any protectionist country. teddy roosevelt viewed free trade is a form of moral degeneration for reasons i can talk about theater. he says thank heavens i'm not a free trader. it seemed to coincide with the fatty degeneration of the moral fiber. what he meant there is a life-size figure philosophy. free trade is the international application of the idea of
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laissez-faire, purely free market, deregulate everything. that is an idea of a developed take seriously. the united states hasn't taken that seriously for well over 100 years. there is some rhetoric from right-wing people that we believe the massé fair. if you believe ronald reagan or richard nixon or george w. bush did in office and try to do, nobody believes them suddenly when you look at our international economic policy, we take the strange theory that died in the 1890s domestically and we certainly true to gospel truth. another thing to make you that maybe there's a real controversy here. i harp on this because free trade gets tuned out by all of the media, most of our political system.
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it takes a little stage setting to hopefully tissue eyes to take the idea seriously need the free trade does not work. this is a translation of my book into chinese. we started in taiwan. we are doing korean. i have some friends here have told me it's okay. i have some friends here have told me it's okay. if you look at the successful economies in the world, whether china and japan, germany, austria, swigermany, austria, switzerland, so on so forth come of the rest of the world doesn't believe in free trade. these are your the countries we are borrowing money from. they seem to let money to spare if we don't. the reality is the other major economies in the world either openly repudiate free trade, for example, the government is very
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brazen about promoting its own exploits, limiting import for foreign countries amid hundreds of major policies to do this and other countries have more democratic cortical systems and less authoritarian forms of government. they do largely the same thing in a polite way. there's no question japan manages its trade or that germany and the germanic countries manage their trade. they control what their experts are and they're doing very well and we are the ones fireweed money right now and they are the ones funding to us. the other countries that go our way to take seriously the idea free trade is an entry to countries in similar problems we are written. for example, the u.k. is having the same problem we're having.
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hopefully this exit from put on the table here make you realize this consensus we have that free trade is a known good thing, maybe there's a problem here. a recent article article by jeff nitrate, which is starting to question, is there a problem here? so what i want to say is having the did this in some depth and i wrote my book ecocide i'm interested in the topic from margaret dunn as an economist in private part is. i was looking for but to tell me if anybody actually the death this been a very long time? i decided to read the book myself. what i discovered is the consensus in favor of free trade is largely project by special interest groups, specifically u.s.-based multinational
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corporations refer to as american corporations. if you look at their own communications emitted under circumstances where some interest to say this, they are quite clear they don't care about the american national interest or the u.s. opposed to any other countries where they produce goods and sell them. it is in their interest to promote the policy so-called free trade. they're very, very few restrictions on imports to the united states. globally speaking the concept of free trade is not really free trade. this free trade on the part of the u.s. and manage straight on the other major economies, but it is our belief that so-called free trade that allows them to fair trade against us when you out of policies, that's where the $500 billion a year that
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mentioned before, that's where that comes from. u.s.-based multinationals find it convenient to have access to the american market to produce anywhere they want in the world and sell it here without or responsibilities in post on them in return. so they promote the concept of free trade and have the ability to push it through the power of lobbying at dominus of institutions like the u.s. chamber of commerce, which is really strong of the republican party and they also have the indirect influence of the intellectual establishment in this country, which is a structure composed of journalists in think tanks and universities and various other people who think, write to inhabit interlaken influence influence on public opinion.
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all these institutions are in various ways under the control for at least the influence of the large corporate interests. i have no interest in promoting some marxist conspiracy theory here, but it is simply true american media is dominated by fewer than half a dozen large conglomerates documented and not tonight. it is simply true if you look at the economics department at the major universities, who runs these universities? who funds that? is not a conspiracy theory. it's a basic reality that the money and power are set up when you have an interest groups that have so-called free trade in their interest, they have the ability to push the academic establishment and the public policy establishment and the journalist in print and television to tell the voters this is the right policy whether
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or not it is. that one of the things i mention in my book is if you look at a poll done about 10 years ago of economists, 93% of american economists are in favor of free trade with reservations. but only 70% are prepared to endorse free trade without reservation. but this raises in my head in an yours is what what is a reservation? what you discover is the consensus free trade is known to be a good thing all the time is not really what economists think. it is dangerous to tell the public anything else because of its own populace for the protectionist on the countries
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throughout with no logic and not be a bad thing, so you're better off telling people free trade is best. they always give you the free-market answer. economists know perfectly well is a lot of the missing caveat to free-market, which is why we don't live in 1890s robert baird economy anymore. they also know it's dangerous to allow people to think anything otherwise, so they tend to take a rhetoric and public, talking to those they view as uninitiated. if you scratch the surface, there's a 30% cap with some reservations. 30% would take the other side, but what you discover your 60s talk to economists who are specializing trade is a field beuse ecnomics like other disciplines is broken into
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fields, people are actually much less dogmatic on the subject and people who are specialists in some other field are telling you what they remember about trade economics in grad school. the other thing i find fascinating is that the taxi people who specialize international trade and teacher business schools come you discover they're even less dogmatic about free trade and the reason for this -- i puzzled over this for a while, but the reason is if you teach pearly academic economics you can be indifferent to the fact is there some losers. we all know this and her personal life, and her career, more advantageous and less advantageous outcomes for you man the other guy. if you're a pure academic economist you can shrug your
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shoulders good if you teach in in business school come you have to tell people how to be the winner. business school economists are more realistic about the fact that he teach people how to conduct international trade from you have to be realistic about the fact trade area or site there. if you want to import to the united states, there's few restrictions. if you want to export to china were some polite but so conniving country like germany or austria coming in each note the rules are because they are not what it says on paper. we have this construct called the wto, which says we all agree to have free trade. most of the rest of the world understands that's not quite a sham, but a gentleman's agreement to conduct to manage trade in a relatively polite way.
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most of the road in the city who are lawyers they understand this does not take the letter of the law as seriously as the united states. we observe our wto commitments and the rest of the world doesn't. if the united states try to practice administrate other countries practice under current law come you could go to federal judges to the government and make them stop. that's not true in most of the rest of the world. wto doesn't have nuclear weapons. they can't make a country like china open its markets to the united states at the chinese don't want to. most of the rest of the world understands that. so that to my original point, if you teach economics, you have to tell people there's winners and losers. one of the things i discovered
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acidic salt treated as completely obvious. for example one of the major steelmakers in the u.s., he says that if a given her some countries we can't sell to. you have to put the plant there and misunderstood that is the reality of the game. when i found that out, i thought if that's the reality, why doesn't the theory lineup with reality? i hate it when people say this is true in this, but false in the area. no commies got the the wrong theory. if you have experience about over the theory does not line up, don't just give up on your theory. get the right theory. i discovered a number of things
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i looked into that. the first is the economics, which supposedly proves free trade is best rest on a whole lot of them supported assumptions. the problem with a lot of people when they criticize free trade economics is on its own terms a few cryptic assumptions of economic theories, it is true. economic theories, it is true. that's why you can't critique it. you've got to dig out what the premises are. for example, most of the theory you look at georgia with trade deficits. they assume any free-market we have this wonderful it librium that will be reached at doha on straight. sometimes they don't even make that an explicit assumption. it's very different if you don't. why is it different when you don't have balance trade?
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that is to say you run a freight deficit. we don't get stuff for free. when the import more than we export, we don't just take it one step at a wickedness of the hires of foreign nations. corporate giving exchange is it go into debt to them or sell off existing assets. if you wanted to spend more than your income is individual can meet either have to rack up credit card debt or sell a unwanted junk on ebay. as a result of the united states runs a trail that said, we have a declining net worth. we are poorer. that's not even economics. that's not even to mention the issues of whether pikas produced
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abroad destroys jobs because jobs are created overseas as opposed to created here. it is no accident our economy is having such a hard time recovering. part of that is the overhang of debt and deleveraging and part of that issue to the factor of $500 billion a year of demand going overseas. there's other issues with the economic theory behind free trade. the city to study study economics in school or a family with the issue may have heard of something called the theory of comparative advantage. if they're invented in 1817 a man called david ricardo paper stock broker and became an economist after reading adam smith's wealth of nations on vacation. this theory has been around since then and not on terms that there is valid. i spent an entire chat or
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explaining what the problems in the theory are. some of them get a little bit technical. trade deficit is one problem because he was senior trade position could go on forever. another issue with comparative advantage is the problem trade moves the goalposts. the theory even if you take it at 100% true, but even by 100%, all it is is a theory about the best spot to make this stuff first is that stuff right here right now. it completely ignores, doesn't have anything to say how trade will affect the industrial and economic structure of the country. what i mean by that is if we buy, for example, automobiles from japan or aircraft parts from china, this doesn't only
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mean the tickets today for less money that we may pay to produce them ourselves. in these industries will grow in strength and in the future. it needs hours alone. as a very sick if it came key validity site. if you look at the effect of our trade deficit on economic growth, would then run a deficit since 1975. if you add a cumulative loss of economic growth due to those deficits, you look at something calculating to be 13% of the u.s. economy. that's the size of the entire canadian economy. it probably would've been there for a month straight. but a look at how the federal budget staff, cuts to the
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program we don't want pat or any of this stuff, that traces back to trade because we have less tax revenue. we have listed him because we have less economy and mr. whitlock cumulative effect, which is a problem entirely ignored by simply looking at the theory of comparative advantage. i mentioned fighter planes. the midpoint one other thing out. i am primarily concerned with the economic implications of the free trade issue. there's a lot of noneconomic implications. for example, the united states today is unable to put a simple military aircraft in the air without components made by potential adversaries. i gave a talk at national defense university in washington three years ago and they said we
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kind of know that the defense contractors control congress and nobody cares. i'm like okay. you guys worry about it. if you don't mind the idea of the usb depend in for his defense, hostile nuclear and leadership, go ahead. i think there's some kind of problem there. that is part of free trade. other nations manage this stuff. the u.s. historically prior to the end of the cold war had controls on this stuff because we understood they needed industrial base not only for economic reasons, but also security. interestingly enough it ties back to american history because they mention alexander hamilton
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before. one of the reasons he became a protectionist among the founding fathers, the guy who turned just direction. he said if we just have free trade in this new country we put together, it was a policy option. it was controversial. didn't talk about the same vocabulary, but they knew they had choices. hamilton said we are going to end up as an economic dependency of year. at the united states the entire agricultural society with minimal manufacturing and the great industrial powers, particularly the u.k. we just thought it worth independence against. hamilton said we can't be dependent, so we need to have a protectionist policy. the interesting thing is that it's not just an issue of national defense.
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which you discover if you look into the history, by the way the history goes back to the renaissance. the economics of free trade first emerged in a rational discussion and the italian renaissance in florence, venice, economics began with adam smith is not sure. if you look back 500 years at the history, you discover every economically developed nations got that way practicing some kind of protectionism, not just the united states, but the developed colonial countries like canada, australia and then he turned back europe the first industrialized countries. the u.k. turned aggressively towards free trade in the mid-19th century, but prior to that they'd been one of the most protectionist countries in
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europe. it may miss mercantilism, which is a phrase you may have heard if you crossed paths with economic history at any point. there is a myth promoted by free trade to mercantilism was kings wanted to word perils of gold in the basement of the palace. that's not what it's about, though i have to observe a lot of gold is the only way to expand the money supply. so hoarding gold is not these people. we talk about expanding the money supply with the fed. mercantilism was a systematic velocity and it goes back 500 years of how to manipulate the free market to develop the country because laissez-faire will not do it. it never has done it. i don't know if any country that's gone from being a third
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world country to a first world country under laissez-faire. all countries at one time. all countries at one time. the u.s. at the time of the american revolution was considerably more primitive than bangladeshis today. every country has a counter example to the myth that free trade is best. the question that naturally provokes is why did we change our minds? why did we go from the protectionist policy of teddy roosevelt around 1900 to the free trade reembrace after world war ii? the answer is that wasn't an economic decision. when i first realized there is a switch, i said i want to trace this thing down to figure who change their mind when, why and how they persuaded everybody else. you know what i discovered? and never have been because it was noneconomic decision at all.
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it was a political decision to win the cold war. in 1945, 46 and 47.


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